What is an ETF Agent?
ETFs are mutual funds that trade on listed securities exchanges. There are several key components of daily operations unique to the ETF structure.
Nottingham and ETF Lighthouse technology support these daily ETF operations:
- Portfolio Composition File (“PCF”)
- Authorized Participant Portal
- Basket creations and redemptions
- ETF Transfer Agent, issuance and redemption of ETF shares
What does each process entail?
- Portfolio Composition File (“PCF”) – The PCF is generated each afternoon to inform market makers what securities in what proportion are held by the ETF, so the market maker can determine the bid/ask offer during the next trading day
- Authorized Participant Portal – Our custom portal gives Authorized Participants a way to communicate with the ETF to know the composition and settlement instructions for the ETF create and redeem baskets
- Basket creations and redemptions – Calculation and communication of the composition of create and redeem baskets, and posting of special redemption baskets when an ETF portfolio manager seeks to rebalance one or more positions in the ETF portfolio
- Issuance and redemption of ETF shares as ETF Transfer Agent
